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Paul Mosgovoy
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Truth is timeless: “Markets never change” – Jesse Livermore, 1923 The early masters, Livermore, Wyckoff and Loeb isolated themselves from the crowd and crowd thinking. None of them ever graduated high-school and yet they each became legends in the market. Their techniques have been time-tested.... More
  • Market Summary: DUST, GDX, GLD 6 comments
    Apr 15, 2014 4:20 PM | about stocks: DUST, GDX, GLD

    The Market Vectors Gold Miners ETF (NYSEARCA:GDX) and the SPDR Gold Trust ETF (NYSEARCA:GLD) continue to point to the probability that gold and the gold mining sector may be setting up for a major sell-off that leads to a (final) capitulation of the gold bulls.

    That has been our theme since the initial update indicating that something was wrong with the bull case for gold and the gold miners. So far, price action is at least confirming that the trend is down.

    Taking a look at the intermediate-term perspective, the weekly chart of GLD shows that price action looks to have completed its counter-trend move and is posting an out-side down weekly bar.

    Of course, there are two more trading sessions to go for the week.....however, the fact is that GLD has already posted a higher-high and a lower-low than last week.

    The wedge formation is clear. If there is a break of the lower support line (at approx: 115), the measured move projection of GLD would be to the 95.00 area.

    (click to enlarge)GLD Weekly

    Chart by TeleChart

    Looking at the GDX, we now have a trend-line with several contact points.

    Once again, the chart of GDX is inverted:

    (click to enlarge)GDX Inverted

    Chart by TeleChart

    We are using the GDX as a proxy for the Direxeon Daily Gold Miners Bear 3X ETF (NYSEARCA:DUST) as the GDX does not contain the tracking errors prevalent in some of (if not all) the inverse ETFs.

    Disclosure: I am long DUST.

    Stocks: DUST, GDX, GLD
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  • User 195396
    , contributor
    Comments (448) | Send Message
    Not sure I care much for your inversion of the chart-hard to change decades long habits of reading charts in the normal fashion-just a comment FWIW. I guess I do not see what it improves.
    15 Apr 2014, 09:15 PM Reply Like
  • Paul Mosgovoy
    , contributor
    Comments (120) | Send Message
    Author’s reply » No problem....... will use DUST.


    I read this technique long ago and not sure I remember the text. I think that it was one of Dr. Elder's books (Trading for a Living...).


    Basically, if you can look at a chart right-side up and then up-side down and still be bullish (in his example), then you have a bias problem.


    So, I use it on myself to make sure that if I am bullish and I turn the chart up-side down, then I should be bearish.


    Thank you for the note,


    15 Apr 2014, 11:02 PM Reply Like
  • User 195396
    , contributor
    Comments (448) | Send Message
    Thanks-my cmt was probably a nitpic in the grand scale of things-total confusion on direction of the mkts is causing me to get very grouchy-need to remember "never trade angry."


    What do you think of the AEM/AUY deal on Osisko-not sure why AEM is down so large-very long AEM.
    16 Apr 2014, 12:41 PM Reply Like
  • Paul Mosgovoy
    , contributor
    Comments (120) | Send Message
    Author’s reply » I can appreciate the frustration,


    Before I answer the AEM/AUY question, I will say that my report on Randgold still stands. It is the best-in-class as far as I can tell and if/when the market bottoms out, I will most likely be looking to re-position.


    So, I went from being bullish and being in the green on Randgold, to recognizing that something was wrong, something amiss with the whole bullish case.


    I then sold out of all long positions and began to gather data and position for a move in the opposite direction.


    From past experience (a bad bond trade in 1998) I am not able to wait-it-out while the move goes against me. That is just part of my own nature.


    That bond trade went against me much farther and lasted much longer than I was willing to, just giving my own approach. If it is going against me and I am not able to explain exactly why (and back it up with data), then I must exit the trade.


    With that said, I can say from 24-years in the corporate world that I have never.....never seen a merger that was timed properly. They are always a minor or major disaster....depending on the incompetence level of management.


    Is that the case with Osisko? I do not know. However with a quarter-century of experience (and maybe yours too), it is pretty safe to say that the timing is not right for the deal.


    If gold continues to decline and the stocks with it, we can expect the proverbial lawsuits. I frequently get "class-action" material letting me know that I can petition for damages on some stock-gone-bad.


    I think that the last one I got was for Molycorp and the one before that was for Juniper Networks....the list goes on. I have never signed up...ever. It is my own fault if I can't read the chart properly.


    But, I digress.


    I am presenting the data as I see it. If the data is telling me to go short the gold sector and each day that passes, the data continues to add and support, then I must go short.


    Getting back to the question, if there is a merger then you have a near guarantee of "surprises" that get revealed after the acquisition.


    Then comes the accounting problems (trying to paste together two companies) and near as I can figure, it is at least two years before the merger begins to oscillate out.


    I hope this helps at least a little. If the company merges (and the cap sizes are near equal) ..........then, I most always sell.


    16 Apr 2014, 02:30 PM Reply Like
  • ptTL9
    , contributor
    Comments (327) | Send Message
    thanks for analysis, interesting view, I am invested in Dust at the moment, but not sure of the direction.
    16 Apr 2014, 11:55 AM Reply Like
  • Paul Mosgovoy
    , contributor
    Comments (120) | Send Message
    Author’s reply » Tank you for your input....


    We all have our own ways of market analysis. After about 30-years of study and about 40,000 hours dedicated screen time, I am still honing the techniques that are used in my firm.


    If one takes the view of the original premise....that there is a possibility of a wash-out event in gold and the gold sector, then we can begin to gather data that will either support that premise or begin to chip away at its validity.


    At this point in time (and it could change tomorrow), the market action in GDX is supporting the case that the trend is down. Back and forth oscillations that appear to be going no-where....when in fact, they are going somewhere.


    Taking a close look at the action (use DUST if it is easier to look at a bullish condition), it shows that we have had an impulsive move down in GDX, a counter-trend move that is ending and what looks like the beginning of another impulsive mover lower.


    From a Wyckoff analysis standpoint, this back and forth action is necessary to build up energy for the next move (whether it be up or down). In the GDX case, that next move appears to be down.


    The public, from what I can tell is completely unprepared for yet another move lower in the gold sector having been told over and over from "newsletter" publishers that we have reached a bottom.


    It is this fervor of commitment (via comments on SA bull/bear) articles that hints of the idea that something is wrong with the bull case. The little guy almost never wins.....If that is the case, we can not have a bull move yet.....not until the "average" investor is wiped out.


    Thank you again for your comment...... I appreciate the input.


    16 Apr 2014, 01:57 PM Reply Like
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